Nifty 50 Analysis for the last week of 2022
In our last week's study, we concluded that 'Nifty 50' would retest the level of 18450-18500 and fall further to make a low of 18180. We also predicted that it would make a low of 17800 if broke below 18100 with good volume. The below chart shows that our analysis was correct.
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| Picture 3.1 |
Also, See the volume chart below; daily volumes are increasing.
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| Picture 3.2 |
Let's now start our analysis of the index for coming week.
NIFTY 50
Technical Analysis
Looking at
the charts above, it is evident that the price is falling and volumes are
rising, which means bears have started gaining control. If you see the
daily chart of Nifty, it has formed three good bearish candles which are
also indicating a further fall. However, 17800 can act as support, because here there is a 21 weeks’ exponential moving average.
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| Picture 3.3 |
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| Picture 3.4 |
In the same way, the hourly chart also shows that the price is 103 points away from 9 EMA, 235 points away from 21 EMA, and 400 points away from the 50 EMA, which means hourly Nifty chart also gives some room for an up-move, before falling further, in the form of hourly bearish cross (09 EMA & 21 EMA) retest.
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| Picture 3.5 |
Looking at the RSI readings, we see that daily RSI (7-length) is at a level of 20 (See Picture 3.4) which means either index will gain strength from here or will enter in the oversold zone. The hourly RSI (7-length) is in the oversold zone (See Picture 3.5) which means buying might emerge from these levels, but only to provide more comfort to the fall. After studying all above mentioned points, it seems that a little bit of rally might incur next week. This up-move can go up to 18050-18150 which are 21EMA and 50EMA on hourly chart; 18150 is the 50 DEMA also. (See Picture 3.4 & 3.5)
After looking
at the EMAs and RSI readings, our Nifty technical analysis suggests that
index might retest the level of 18050-18150 or it might trade sideways until EMAs
reach near the price. However, if Nifty opens gapped down or falls with good volumes
on Monday, 26 December 2022, then 17400 will be achieved next week.
News and
other factors
The current
COVID outcry in China is a big bearish signal for the Market. Additionally,
Next week is a holiday week, due to Christmas and New Year, therefore FIIs
might not participate in next week's trade which could result in dried out
volumes.
NIFTY 50 Open
Interest and FII, DII Data
The OI change
data, in the figure below, shows that there has been a good call writing today,
23 December 2022, with negligible put writing. Also, the open interest data,
in the figure below, shows that strong call writers’ zone is 18000-18050
price-zone and slightly better put writers’ zone is 17800-17700 price-zone.
Which means our study of OI data gives us a bearish signal.
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| Picture 3.6 |
The Institutional figures show that foreign institutional investors have sold the shares worth ₹979.48 crores and domestic institutions have bought the securities of worth ₹8545.06 crores last week. So, the net institutional buying of ₹7565.58 crores has happened last week which means DIIs are buying the dip heavily, and they might not let this sell-off last for long.
After looking
at all the data, chart, and factors, it seems that market will remain sideways to
bearish next week, because
- All the EMAs are away from price,
- RSI is nearing oversold zones,
- COVID news from China gives bearish signal,
- Holidays might dry up the volumes,
- Option Data is bearish
- FII DII Data is bullish.
So, the
overall sentiment is bearish but if there happens to be any positive trigger
next week, it should only lead to a retest to resume the fall again.
Note: I have just shared what I studied. I am not sure if I’ll
trade next week or not. Also, the Data, used for analysis, has been taken
from different sources on internet and I am not a SEBI authorized analyst, therefore verify the data and seek experts’
opinion before taking any trade.
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